Huge pension payments to executives could trigger a wave of shareholder protests at some of Britain’s biggest companies this year, amid mounting anger over the generosity of contributions made on behalf of directors.
The Investment Association, which represents many of Britain’s biggest institutional investors, has written to the 350 largest publicly owned companies in the UK warning that its members are keeping a close eye on pension awards made to executives. It warned that many companies could face revolts unless they can demonstrate a sensible alignment between the pension awards made to senior directors and their performance.
The warning follows changes to the UK’s corporate governance code, which now insists that pension contribution rates for executives should be in line with those that apply
to the wider workforce. Investors – partly prompted by wider anger at executive pay, and its apparent total lack of connection with shareholder returns – are also increasingly concerned about new research from the High Pay Centre and Chartered Institute of Personnel and Development, showing some FTSE 100 CEOs enjoy pension contributions worth more than half their annual salary. The figure for the average worker at such businesses is more like a tenth of pay.